Dow Corning earnings, profit down

Published 8:45 am, Tuesday, July 31, 2012

Dow Corning Corp. continued to struggle in the second quarter as its sales dropped 6 percent and net income fell 36 percent compared to the same quarter a year ago.

The company said today that its second quarter sales were $1.57 billion, down from $1.67 billion in the same period last year. Net income fell to $121.3 million from $190.8 million.

"The first half of 2012 presented significant challenges as oversupply in both the silicone and polycrystalline silicon industries combined with high raw material costs continued to impact our performance," said Dow Corning's Executive Vice President and Chief Financial Officer J. Donald Sheets.

The company reported that sales in Europe were significantly lower because of economic volatility in the region.

Sheets said the company is working to control its costs.

"Protecting our competitive cost position at both Dow Corning and Hemlock Semiconductor remains essential to our long-term success, and we continue to aggressively pursue opportunities to increase efficiency and reduce costs in our operations," he said.

Dow Corning's Hemlock Semiconductor Group joint ventures are challenged by oversupply in the polycrystalline silicon market, Sheets said. He said additional challenges include the "economic and political uncertainty surrounding the solar industry."

Leaders in Dow Corning have shared concerns about trade policies with foreign nations as trade disputes increase globally. Dow Corning CEO Robert Hansen said in a recent statement that no country or industry wins when trade disputes escalate.

"Ultimately, I am optimistic that a reasonable and mutually acceptable resolution is within reach which will enable and foster growth and cooperation," Hansen had said.

Dow Corning is a joint venture formed by The Dow Chemical Co. and Corning Inc.

Dow Chemical Chief Financial Officer and Executive Vice President William Weideman said Dow Chemical does not expect earnings to strengthen at Dow Corning in 2012.

"Equity earnings are expected to remain flat, as the benefit from lower turnaround cost at MEGlobal will be offset by continued weakness in Dow Corning..." he said last week during a call with chemical industry analysts.

Corning Inc. reported that its equity earnings from Dow Corning were $61 million in the second quarter this year, declining 36 percent from the second quarter of 2011.

Corning Inc. reported that its equity earnings from Dow Corning are expected to decline about 30 percent in the third quarter, "driven primarily by the non-repeat of an $11 million gain in the second quarter. Normal summer manufacturing shutdowns will contribute to the sequential decline."